A crow is backdropped by the smokestacks from the Tuft's Cove generating plant in Dartmouth last month. (TIM KROCHAK / Staff)

Photo

RACHEL BRIGHTON

A $6.5-million rap on the knuckles of Nova Scotia Power this week suggests the public should be watching power purchases as keenly as power rates.

Back-to-back rate hikes of three per cent for all customer classes in 2013 and 2014, effective Jan. 1, will be an unwelcome way to ring in the new year.

But an equal concern, heading into a public hearing on the Maritime Link project, is the breakdown of trust flagged in a wide-ranging decision issued Friday by the Nova Scotia Utility and Review Board, covering future power rates and past fuel costs.

Among the financial setbacks for the utility were $4.5 million in “disallowed” fuel costs in 2010 and 2011, which are being clawed back for customers following a controversial audit, and a $2-million sanction for bad behaviour.

Of the overspent fuel costs, $3.6 million relates to coal-burning practices at the Lingan generating station and $903,000 relates to a natural gas contract.

In 2010, the utility was using cheap, dirty and inefficient local coal stripped from the Pioneer Coal Ltd. surface mine at the site of the former underground Prince mine at Point Aconi.

The board linked the utility’s use of local coal to the provincial government’s decision that year to offer a temporary reprieve on meeting strict limits on mercury emissions. The reprieve for Nova Scotia Power was designed to keep a lid on fuel costs.

But burning high-sulphur and high-mercury coal, with a low-energy output, was “imprudent,” said the board. It ultimately led to higher fuel costs to avoid exceeding pollution limits.

The other “disallowed” fuel cost is tied up with a mysterious bidding process on a natural gas contract to replace a supply from the offshore Sable project.

Nova Scotia Power’s auditor, and several large industrial customers, had alleged an affiliate of Emera Inc., which is the parent company of the utility, may have interfered in the bidding process to preserve its market in a way that eventually drove up fuel costs. The board rejected that suggestion, but ruled the utility could have acquired natural gas for less cost.

Most troubling to the board was the utility’s decision to wait until the last day of the hearing to disclose critical information about its activities in the natural gas market, in which corporate affiliates play key roles. Its delay earned it a $2-million sanction for wasting time and money.

Despite its “dismay and concern” about such corporate behaviour, however, the board is bound by confidentiality and can’t reveal just what this costly revelation entailed.

In hindsight, such apparently simple and straightforward fuel purchases have been complicated and inflated by “imprudent” management and a deliberate lack of transparency.

How much more complicated will be the parent-child relationship between Emera and Nova Scotia Power, if Emera’s $1.5-billion Maritime Link project is approved next year?

And will these complex transactions be conducted under the same shroud of corporate confidentiality and a cone of silence?

An auditor will have to answer those questions, down the road, before the bills arrive.

Rachel Brighton, a freelance journalist and former magazine publisher, writes on industry, ethics, economics and the environment.